A question from my macro mid-term

"Imagine that we live in the world of Malthus, where real wages hover at subsistence and boosts in living standards occasion population growth which then push wages back toward subsistence.  Furthermore if some of this population growth comes through improved sanitation and fewer deaths, it can happen in the short run, not just the long run.  How might this change real business cycle models?  What are the implication of a Malthusian model for interest rates."

MR readers are, of course, free to leave their answers in the comments.


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